Tag: Mortgages

With rising real estate prices across the board, not to mention in locations with a high cost of living already, buying your first home can seem daunting. You may be planning on buying your first home in a few years, but using these tips today will help you slowly start to save for that first down payment.

Originally, most mortgage companies requested a 20% down payment, which in today’s world can seem a little out of reach. However, with a few years of planning, you may be able to grasp this goal with a teacher’s salary.

Anything under 20% for your down payment may require you to pay PMI – or private mortgage insurance – on top of your mortgage payment, home insurance, and property taxes. Also, with this down payment, you can build up enough equity so that when you do go to sell your home, the closing costs and fees don’t eat up all of your investment.

However, there are a few ways to get a lower down payment as well if the 20% isn’t feasible when you’re ready to buy.

Check out Teacher home loan programs

There are many different teacher home loan programs out there, that allow you to buy a house without a 20% down payment.
Most of them do require some sort of initial investment. FHA, for example, only requires 3%. Even if you plan on investing 20% at the start, you can get some neat perks like discounted closing costs and even donations to your school.

If you do decide on a lower down payment, you may want to continue using some of these tips to ensure you hit 20% equity before you go to sell your home. Be sure to check your mortgage loan for prepayment penalties if you do plan on making any extra principal payments.

Figure out your monthly goal

First, you’ll want to decide the price range of homes you’ll plan on looking at. Next, you’ll want to get prequalified with a lender to see what interest rates and programs you qualify for. Also, this is a good time to see if you need to do any work on your credit as well.
You can also use sites like Karl’s Mortgage Calculator to help you figure out future monthly payments depending on what you pay for your home and the down payment.

Set up an emergency fund

Even while you’re saving for a down payment, emergencies still happen. If you start out with savings that will cover three to six months of expenses, it’ll help you stay on track for your down payment when you need a sudden car repair or have a medical expense.

Planning for emergencies in advance helps you stay focused on your other goals.

Get a savings account

Open up a savings account with your bank or find one online. Make sure it’s an account that you can easily pull the money out of when needed.

You can set up an automatic deposit from your paycheck each month if your employer uses direct deposit. This is the best way because your money never touches your main spending account and eventually you’ll get used to seeing the net amount in your checking each month.

Adjust your budget

You’ll want to set your budget up so that you can reach your goal each month. You may have to change some of your spending habits or even give up some extravagances for the luxury of buying your home. Some ways to cut spending is checking with credit card companies on lowering interest rates. If you pay on time each month with the required amount, you can call in and tell them you want a lower rate.

Also, you may look at renting a moderately nice apartment instead of the three-bedroom house with a huge backyard, or you may want to trade in your car for a lower car payment if that saves you money. Anything that you can cut, even barely, will add up over time.

Use extra income wisely

Anytime you receive any large income outside of your regular salary, consider putting all or most towards your down payment savings. Tax returns are great opportunities to build up your nest egg. If you do any side jobs or summer jobs, try budgeting some of that income into the mix as well.

Your main goal is to funnel any kind of extra income into reaching your goal faster. Saving for a down payment can take a couple of years, but the equity you create will be worth it.

If you are a teacher looking to buy a home and need help with financing, please consider some of the special mortgage programs that cater specifically to educators. Here we cover three of the top programs that offer teacher home loans.

Why Should you Explore Teacher Home Loans?

First off, these programs were created with educators in mind. They may offer some perks and/or discounts that you may not get from traditional financing options. Whether it’s a donation to your school, discounted closing costs or lower interest rates, teacher home loans might very well be what you are looking for when you wish to finance the purchase of a home.

Here are 3 of the best teacher mortgage programs for professional educators:

Educator Mortgage Program

Discounted Closing Costs – Supreme Lending is offering up to $800 in reduced closing costs to educators. If you qualify, you will receive a credit on your HUD-1 settlement statement for up to $800.

Discounted Real Estate Agent Fees – The Educator Mortgage Program looks to work with real estate agents who want to give back. As an educator, you will receive a credit on your HUD-1 settlement statement up to $800 from participating Real Estate Agents. These funds can be used for any fees, prepaids, seller fees, or new escrow account set up for your new loan.

Fast Loan Process – Supreme Lending emphasizes that educator clients are given highest priority. Educator loans are handled expeditiously so as to ensure “a smoother and more enjoyable experience.”

Donation to Your School – With the Educator Mortgage Program, a donation of to $200 will be made to the school program of your choice. If you work with a participating real estate agent, an additional $200 will be donated, for a total of $400, to the school program of your choice!

Visit the Educator Mortgage Program’s website for more info on their teacher home loans. They offer various home buyer mortgage programs for educators, including FHA loans, Fannie Mae, Freddie Mac, VA, USDA, Jumbo and many more (see descriptions of some these programs below).

Teacher Home Advantage

The Teacher Home Advantage program by Pacific Home Mortgage offers various options for teacher home loans. These range from:

FHA Loans – Federally backed loans with a low fixed rate, great for the educator who is a first time home buyer.

Conventional Loans – These are not backed by the government and usually require a larger down payment. However, one advantage of these loans for teachers is that monthly mortgage insurance is not generally required.

USDA Loans – 0% down loans that are insured by the government. These loans are only offered in “rural” areas. The fact that these loans require no down payment puts home ownership within the reach of many teachers and other educators.

VA Loans – If you are a veteran, this could be a great option for you. Like the USDA loan, it does not require a down payment.

Home Path Program – This program is only available for the purchase of Fannie Mae owned homes. It offers educator borrowers low down payment options, flexible terms, no mortgage insurance and no appraisal fees.

“Making Home Affordable” Program – Teacher Home Advantage works directly with this program. Basically, it includes opportunities to help borrowers make their monthly payments more affordable. In other words, it allows homeowners the chance to decrease their current mortgage payments, even if they’re “upside down” in their home.

Teacher Next Door – This program (more specifically HUD’s Good Neighbor Next Door Sales Program) offers Pre-K through 12th grade teachers the opportunity to make a contribution to community revitalization while receiving a substantial 50% discount on the list price of a home. The limitations of this program include that you must commit to live in the property for 3 years, and the qualifying homes are located in HUD-designated revitalization areas only.